Wondering where to put your investment dollars in a high volatility market? You know the old adage, “what goes up must come down.” History proves it. Even more so, just look at today’s headlines. The CBOE Crude Oil Volatility Index experienced a 69.57 percent year-to-date change with a 52-week high of 80.78 and a low of 28.81. Last year, hedge funds saw the worst year since the 2008 financial crisis, and this year isn’t looking good either. The Standard & Poor 500 Index fell 6.7 percent in January.
What’s more, internationally, economies are in decline; China is slowing down, Brazil is in recession, and Japan is stagnant. Investors are running from stocks, equities, and foreign investments. But where are they going?
According to Bloomberg institutional investors are putting their trust in real estate and other non-liquid assets. Who can blame them? A few brave fund managers are offering new opportunities in the hedge fund market as everyone else is getting out. As they say, wise investors run against the grain. But you can’t deny it’s a risky venture. In times of high market volatility, the safest place to put your money is in strong economies and real estate.
Volatility doesn’t mean there’s no hope. It simply means the wisest investors transfer their hope from high-risk investments to more solid and proven ones. There is a time to stand in the rain and a time to come in from the weather. It may be time to fold up your umbrella and step out of the torrential downpour. But keep your chin up!
What’s So Good About Real Estate Investing?
Last month, Bloomberg reported that foreign investors are flocking to the U.S. real estate market. A survey by the Association of Foreign Investors in Real Estate (AFIRE) indicates that foreign investment in U.S. real estate has gone up every year since 2009, reaching almost $90 million in 2015. It’s expected to do even better this year.
New York is the top market worldwide for real estate, followed by London and Los Angeles.
Which Real Estate Property Type is The Best Investment for Investors?
Bloomberg says that within the U.S., multifamily and industrial real estate were the favorite property types for a second year, while retail moved up to third place from fourth. Offices fell to fourth from third, and hotels stayed at No. 5, according to the survey. Factors contributing to the U.S. real estate market being a good investment vehicle right now are low inventory and an aging millennial population ready to buy. Scarcity drives up prices. Higher demand will also affect the investment environment, which means that getting in now could prove to be the wisest investment to make in 2016.
Millennials are the largest generation living, and the oldest members of the generation are just hitting their thirties, getting married, starting families, and buying their first homes. If that doesn’t spell opportunity, I don’t know what does. On the flip side, lower income millennials may not be able to afford a home, and since incomes aren’t keeping up with the cost of living, that means the rental market is still wide open, which accounts for multifamily real estate being a hot item among foreign investors. There are plenty of reasons to be hopeful about investment opportunities even in a high volatility environment. Just move your money out of high-risk vehicles into proven, more stable vehicles in strong economies.